President pitches changes to student loans

For the millions of people paying off their student loans, some relief may soon be in sight.

Monday, President Obama authorized a plan that will cap monthly loan repayments. That order allows student borrowers to make those payments at just 10 percent of their monthly income, or less. Right now, that rate is capped at 15 percent.

This move expands current law -- covering not just recent loans, but older ones too. The White House said this change could affect up to 5 million people with federal student loans.

"A typical graduate is coming out of college with almost $30,000 in student loans," explained certified financial planner, Paul Fain. "So, it's been a significant part of their first job budget just to repay those loans. This could provide them some budget relief."

Fain said, as tuition continues to rise at colleges across the country, student loans are also rising.

"The amount of student loan defaults are going up significantly. So here you are, coming out of the gate a college graduate, with a damaged profile. Hopefully these changes will help more students stay on top of their debt and improve their credit score."

Deanna Plewa just finished her undergraduate degree, and is trying to get into medical school. She said she has six months before her student loans kick in, and welcomes the idea of a 10 percent cap on repayments.

"If I don't make enough money to pay off my loans right away, maybe that will make it a little easier for me," she said.

"It helps me sleep better at night because, now I know that my whole entire check -- it wont be taken because I owe x-amount of money," added Tyler Hines. He is still in school, and hopes to graduate in a few years.

Fain warned college students and new graduates to make paying their debt a top priority.

"The temptation is to buy a new suit, to buy a new pair of shoes, I get that," he said. "A new car, a better apartment -- but you really have to practice discipline, because even 10 percent of your budget going to student loans, that is not insignificant."